Gilbert’s AssetCo in loss but assets rise to £2.4bn

Martin Gilbert

Martin Gilbert’s asset manager AssetCo cited an “exceptionally difficult” year for the fund management sector as its total loss for the 12 months ended September 30, 2023, widened to £26.7 million from £8.5 million in the prior year.

Nonetheless, the group’s active equity assets under management increased to £2.4 billion from £2.3 billion the year before.

The firm said 81% of those assets were in the first or second quartile for investment performance over three years (49% over 1 year) “when compared to competitor funds in relevant Investment Association sectors.”

AssetCo reported: “Definitive action taken before end September 2023 to eliminate £2.3m of costs during this financial year with a further £2-3m in cost savings identified and currently in course of action …

Significant value-creating corporate activity with the acquisition of SVM Asset Management and Ocean Dial (completed immediately after year end), and sale of loss-making businesses River and Mercantile LLC in US,  Rize ETF Limited, and River and Mercantile Infrastructure (sale agreed in principle: expected to complete shortly) …

“Ocean Dial Asset Management acquisition adds £0.9m in net revenues from completion (at 2nd October 2023) …

“Active equity businesses simplified and consolidated with heritage asset management activities of SVM, Saracen and Revera all now trading through River Global Investors …”

AssetCo chairman Gilbert said: “The financial year ending 30 September 2023 was an exceptionally difficult one for the asset management sector.

“UK investor funds under management saw persistent net outflows across the industry amounting to £34.8bn for FY22/23, ending the period at £1.38trn, equating to outflows of some 2.5% during the year.

“Rising interest rates, inflation and the residual impact from the pandemic have all contributed to large net retail outflows from UK equities funds in particular, estimated at £13.6bn, accounting for 39% of total net outflows across the industry over the period.

“AssetCo has not been immune from this pressure and River Global saw outflows from a number of its investment strategies, particularly UK equities.

“The challenging backdrop has required us to take definitive action and we have cut costs in our equities business and moved to exit other early stage or loss-making businesses.

“That has, unfortunately, required us to take significant write-downs which have impacted our results for the year.

“The remaining equities business has been simplified and consolidated however, and it is encouraging to see an improvement in our fee rates as unprofitable funds have been merged or closed and inflows have been added at higher fee rates than outflows.

“The further action we are taking on costs has enabled us to identify between £2m and £3m per annum of additional cost savings actionable over the coming months which, together with the addition of Ocean Dial revenues, gives us a potential path to financial profitability, subject of course to reasonably stable markets and assets under management.

“The uncertain global economic and political backdrop continues to weigh on financial markets, although there are tentative signs that overall market activity may finally be picking up.

“The company’s main underlying businesses – River Global and Parmenion – have the financial strength, support and agility to weather current conditions.

“Our management teams have a wealth of expertise and a range of products and capabilities which enables them to capitalise on opportunities as well as meeting the needs of our existing investors and we continue to see the future potential.”